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12/02/2003: Nauru

"Nauru needs sensible financial management, not aid, to emerge from a messof its own making, suggests Helen Hughes"

Not your average left wing "we-need-to-help-these-poor-opressed-people" tirade.

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Copyright 2003 Nationwide News Pty Limited The Australian

April 8, 2003 Tuesday All-round Country Edition

SECTION: FEATURES; Pg. 11

LENGTH: 888 words

HEADLINE: Way out for poor little rich island - THE NAURU SOLUTION

SOURCE: MATP

BYLINE: Helen Hughes

BODY: Nauru needs sensible financial management, not aid, to emerge from a messof its own making, suggests Helen Hughes

NAURU -- an island of 22sqkm, lying near the Equator, thousands of kilometresfrom the nearest large Pacific island group -- was named the Happy Isle by earlyEuropean explorers for its mix of Micronesian, Melanesian and Polynesian people.

Nauru came to Germany in the 19th-century colonial carve-up of the Pacific.The German administration discovered that the barren inland consisted of marinephosphate forced up among coral pinnacles and began to mine it with importedlabour.

After World War I, Nauru became a Trust Territory administered by Australiaon behalf of an Australian, British and New Zealand triumvirate whose farmersbenefited from low-priced phosphate mined by the British PhosphateCommissioners. The Japanese used Nauru as an aircraft carrier in World War II,deporting most of the 5000 Nauruans to Truk in the Marianas, where all but 500people starved to death.

After 1945 the Australian administration returned and the British PhosphateCommissioners resumed mining with workers from the Gilbert and Ellice Islands(Kiribati and Tuvalu) and Hong Kong.

In the early 1960s, when the repatriated population had recovered to about5000 people, Hammer de Roburt, then chief of the local government council,engaged the assistance of the ACTU's Bob Hawke to raise wages for Nauruan publicservants. This was followed with help to raise the price of Nauru phosphate from10 shillings to the world price of 30 shillings a ton (distributed to individuallandowners and Nauru Trust funds).

Independence (with a communally agreed constitution) was won and celebratedin 1968. The guns fired a salute when president de Roburt made an official visitto Canberra. The British Phosphate Commissioners were nationalised so that thefull benefit of phosphate mining would accrue to Nauru.

In 1968 it was clear that phosphate mining had only about 20 years to runand that the (always) uninhabitable centre of the island could not berehabilitated because the coral pinnacles were porous. But at that time eachNauruan woman, man and child was worth $500,000 ($3.5 million in today's money).

During the next decade phosphate prices rose, with huge income flows givingNauruans the highest per capita income in the world. A Sydney consulting firmwas advising Nauru commercially; it started a conservative investment program insecurities and built Nauru House on Collins Street in Melbourne to house Nauru'sphosphate business.

If Nauru as a country and Nauruans individually had kept to conservativefinancial advice, investing in sound financial instruments, each member of thepopulation -- now 8000 -- would have at least $15million and would be able tolive in luxury on Nauru or anywhere else in the world.

Instead, Nauru refused sound professional advice, and publicly and privatelywasted its income. It became, and still is, the victim of the shadiestfinancial, legal and academic operators in the world. Nauru invested in dubiousreal estate, being taken to the cleaners by rogue operators from Melbourne toBoston and throughout the Pacific. It funded a musical in London that failedafter four nights -- after the government had chartered a large jet to fly fromNauru to London for the premiere.

There is an extremely dubious proposal for turning the island into a casinoin return for 50 per cent of the profits going to the triumvirate of sponsors.Nauru would supply the investment funds and the island. The national airline,often grounded, ran losses of $40million annually for years. The Nauru offshorefinancial centre became a focus of terrorist money laundering. Naurucomplemented this by the sale of passports. These activities have finally beenhalted under US anti-terrorist legislation that will hopefully also deter Naurufrom the casino project, which could bring gangsters to the island.

Nauru has shocking levels of health, with high diabetes and and heartdisease. Uncontrolled diabetes has led to a high incidence of amputations.Alcoholism is high. The death rate peaks on Friday afternoon when drunk drivingresults in motor accidents. Only Nauruans who have moved to Australia have highliving standards.

Nauru does not need aid. If it accepts sound financial advice, it can payits debts and marshal its investments so that Nauruans can live in comfort andhealth. Nauruans could implement sensible policies. Norfolk Island, for example,has almost double Australia's per capita income. It does not throw away money,however, on artificially swollen government, representation in New York or anational airline.

Nauru is unfortunately only an extreme example of the waste of resourceincomes in the Pacific, and of Australia's neglect of the Pacific's descent intodestitution and chaos. A debate on how Australian taxpayers' funds are used inthe Pacific is long overdue.

Helen Hughes is a senior fellow at the Centre for Independent Studies inSydney. From 1963 to 1968 she helped Nauru to negotiate with the British,Australian and New Zealand governments to raise phosphate prices to worldlevels, to gain ownership of phosphate mining, to gain independence, and to findsound commercial and financial advice.